Anna 
During Monday’s London session, the Pound Sterling (GBP) demonstrated strength above the psychological support level of 1.2500 against the US Dollar (USD). The GBP/USD pair held firmly as the US Dollar struggled to recover following higher-than-expected Initial Jobless Claims for the week ending May 3, which raised concerns about the health of the US labor market.
Market confidence in the likelihood of the US Federal Reserve (Fed) initiating interest rate cuts starting from the September meeting has increased, reflecting the cooling conditions in the US labor market. Investors are now focusing on the upcoming US Consumer Price Index (CPI) data for April, scheduled for release on Wednesday.
The forecast for the annual headline CPI suggests a softening to 3.4% from 3.5% in March. Similarly, core inflation, which excludes volatile food and energy prices, is expected to decelerate to 3.6% from the previous reading of 3.8%. Economists anticipate that both the monthly headline and core CPI have grown at a slower pace of 0.3% compared to the previous reading of 0.4%.
These upcoming CPI figures will be closely watched by market participants for insights into inflationary pressures in the US economy. Any signs of softer-than-expected inflation could further weigh on the US Dollar, potentially supporting the GBP/USD pair above the key 1.2500 level in the near term.
